GAZA CITY, Gaza Strip (AP) -- A Gaza cease-fire quickly unraveled Friday as violence erupted in and around the southern town of Rafah, with at least 35 Palestinians killed by Israeli shelling and the military saying an infantry officer may have been captured.

Israel and Hamas accused each other of breaking the cease-fire, which had been announced by the U.S. and the U.N. and took effect at 8:00 a.m. (0500 GMT) Friday. The fighting broke out less than two hours later.

The breakdown of the cease-fire and the apparent capture of the Israeli soldier set the stage for a major escalation of the 25-day-old conflict, which has already devastated large swaths of the impoverished coastal strip.

Israel had said it would continue demolishing cross-border tunnels behind its own defensive lines during the cease-fire, and the military said its troops were attacked during one such operation.

Gunmen emerged from one or more tunnel openings and opened fire, with at least one of the fighters detonating an explosives vest, Israeli army spokesman Lt. Col. Peter Lerner said.

He said 2nd Lt. Hadar Goldin, a 23-year-old from the town of Kfar Saba, was apparently captured during the ensuing mayhem and taken back into Gaza through a tunnel, while another two soldiers were killed.

"We suspect that he has been kidnapped," Lerner said, adding that the attack took place an hour and a half after the cease-fire began.

An Israeli official said the apparent abduction marked a "very dangerous escalation of violence" and that there would be no three-day humanitarian cease-fire. He spoke on condition of anonymity because he was not authorized to speak publicly about the matter.

It was not immediately clear if the possible abduction was linked to the heavy shelling in Rafah, which sent families fleeing from apartment blocks that had pillars of smoke rising from them. One woman carrying two children rushed toward a parked car. "Quickly, open the car door!" she yelled to a man standing nearby.

Ambulances ferried the wounded to Rafah's al-Najar hospital, where bloodied bodies on stretchers were carried inside and family members frantically searched for loved ones. Many of the injured were young children, their clothes stained with blood. In one hospital room, four children were treated on a single bed. Others were being examined on the floor.

He said the death toll could rise as rescue workers search for people buried under the rubble of several apartment blocks hit by shells. He did not say whether those killed were civilians or militants.

Israel launched an aerial campaign against Gaza aimed at halting Palestinian rocket fire on July 8 and later sent in ground troops to target launch sites and tunnels used by Hamas to carry out attacks inside Israel. The war has killed nearly 1,500 Palestinians, mainly civilians, and more than 60 Israelis, nearly all soldiers.

At least four short humanitarian cease-fires have been announced since the conflict began, but each has been broken within a few hours by renewed fighting. Friday's temporary cease-fire was the longest to be announced thus far.

The military said Gaza militants had fired eight rockets and mortars at Israel since the cease-fire began, one of which was intercepted.

The cease-fire, which stemmed from the intensive diplomatic efforts of U.S. Secretary of State John Kerry and U.N. chief Ban Ki-moon, was intended to be the first step toward a lasting truce, with Egypt inviting Israeli and Palestinian delegations to Cairo for talks.

Soon after the cease-fire went into force, Gaza's residents took advantage of the truce to return to their homes, many of which had been destroyed in the fighting.

Near a main road in the heavily bombarded Gaza district of Shijaiyah, less than a mile from the Israeli border, residents surveyed extensive damage.

Basem Abul Qumbus returned to find his three-story home -- in which he had invested tens of thousands of dollars -- uninhabitable. Tank shells had punched a hole in the ceiling of one bedroom and a wall had collapsed into the kitchen.

"The work of all those years is gone," he said, as he struggled to salvage flour from bags that had been torn apart by shrapnel. Food supplies are running short in the blockaded coastal territory in the war's fourth week.

In the southern town of Khan Younis, residents searched for bodies in the rubble of their homes as rescuers and volunteers carried away corpses, some charred, on makeshift stretchers.

Nidal Abu Rjeila found the charred body of his disabled sister on the ground on the side of the road, her wheelchair flipped upside down. He said her body had been there for five days.

"I tried to reach human rights groups and the Red Cross, but no one was answering me," he said while lying next to her body.

Israel says it has tried to spare civilians, including by warning people ahead of military strikes, and has said Hamas endangers Gazans by firing rockets from residential areas.

Palestinian militants have fired hundreds of rockets into Israel since the start of the conflict, extending their reach to major cities but causing very few casualties, in part because Israel's Iron Dome defense system has intercepted many of the projectiles.

Hamas has vowed to keep fighting until Israel and Egypt lift a blockade of Gaza imposed after the Islamic militant group seized power there in 2007, which has devastated the local economy.

At least 1,496 Palestinians, mainly civilians, have been killed since hostilities began July 8, according to Palestinian officials. Israel says 63 of its soldiers and three civilians in Israel have been killed.

Hours ahead of the cease-fire, Gaza police reported heavy Israeli tank shelling in northern and eastern Gaza, and the loud exchange of fire with militants could be heard across Gaza City. Tank shells slammed into the city itself, setting homes and shops ablaze.

Hamas fighters hit an Israeli tank with an anti-tank missile, Gaza police said. The militants then attacked Israeli troops who came to evacuate the tank crew. Clashes continued into the early morning hours, police said.